From Deb Sheals, Public Policy Committee Chair, Missouri Preservation
As most of you probably know by now, the Governor has called a special session of the legislature, to begin on September 6th. The centerpiece of the special session is a massive Economic Development bill that will impact almost all existing tax credit programs, including Historic.
The proposed legislation will make many changes to the HTC program, including a seven year sunset, elimination of the ability to combine historic and other tax credits, and a first ever cap on annual allocations for small projects. (Up to this point, projects requesting less than $275,000 in tax credits have not been counted against the overall cap, which allowed owners to plan without uncertainty about when development incentives may become available.) The new law would create a separate $10 million cap for small projects.
Capping the small deal exemption would have an arguably minor impact upon redemption totals, but affect many program users. In spite of large numbers of projects, the overall cost for this category is low. In FY2010, small projects made up 72% (159 of 172) of the total number of approved projects, but all of those only accounted for 28% of the dollar amount of credits issued (just over $11 million). This would cut one of the most effective state incentives available for modest redevelopment projects. Smaller developers cannot afford to deal with the funding uncertainty that would come with a new cap.
The bill calls for a complete end (sunset) to the program in seven years. This uncertainty will shut down development many years ahead of that time, since it often take many years to get a redevelopment project underway. Alternate language calling for a regular review of the program offers a much more reasonable way to handle this issue.
Other troubling proposals include eliminating the ability to use Historic and Low Income credits in the same project (stacking). This change would be especially damaging to efforts to reuse important resources such as vacated historic schools, which can be very hard to redevelop, but adapt well to new low-income senior and workforce housing.
The proposal also cuts the overall cap to $80 million per year. Although this is a drastic reduction, it is being paired with administrative changes that are expected to make the program much easier to use, which will soften the blow a bit. It seems prudent to accept a slightly lower cap ($100 million is much more reasonable) as long as that is tied to administrative changes.
Ask your legislator to support the small deal exemption and oppose a sunset.
It will make a difference if they hear from us.
Donâ€™t know your legislatorâ€™s name or contact information? Look here.
One reply on “Smart Changes for the Historic Tax Credit Program”
I thought the cap was to be decreased to $90M per year, not $80M.